alignment of business and it introductionknut.hinkelmann.ch/lectures/abit2017-18/abit 01...

member of

Prof. Dr. Knut Hinkelmann

Alignment of Business and ITIntroductionProf. Dr. Knut Hinkelmann


Speaking to the Triple i Convention, Paul Coby, CIO of British Airways, said, "Baroque complexity was killing us: 72 selling classes, 15 types of passenger, 10 ways to pay. [There were] different sources of information, and therefore not always the same answers to questions.

"The airline industry had been based on not telling you what your choice was - but that was blown apart by Easyjet."

Believing IT can be an effective driver of business transformation, Coby said he re-engineered the customer systems and processes. He used four rules, which, he says, turned IT architecture into business strategy:

♦ Have a simple and compelling customer proposal♦ Design processes for use by customers♦ Do it right first time♦ Have a single solution across all departments.

The proposal, agreed at the highest level, resulted in clear targets, including 100% e-ticketing, 50% self-service check in, 80% self-service customer transactions and 100% self-service executive club.

Results so far include elimination of many BA processes ("you can't have a drop-down menu with 60 choices," said Coby), a big increase in e-ticket sales, and a substantial reduction in fares, which also made upselling, for example to first class, easier.

2Introduction to Business-IT Alignment


Business Transformation



Increasingly dynamic environment: Challengesconfronting an Enterprise

4

Disruptivetechnologies

Regulatory Compliance

Corporate Governance

Collaboration/Integration

Efficiency

New businessmodels

Achieving CompetitiveAdvantage

Mergers andAcquisition

Serviceimprovement

Outsourcing

Shifting powersin the value chain

Digitalization

Introduction to Business-IT Alignment


Technology Trends



Drivers for Change can beinternal and external – Business and IT■ External Drivers

♦ Demand for new services and products♦ Competitors with new business models♦ Market Opportunities♦ Disruptive Technologies♦ New regulations

■ Internal Drivers♦ Business Process Optimisation♦ Increase flexibility♦ Reorganisation♦ Migration of Information Systems♦ Changes in IT infrastructure

6

Exploit StrengthsEliminate Weaknesses

Seize OpportunitiesReact on Threats



Agility: Demand for Continuous Change

■ To improve their chances of survival, enterprises need to beagile.

■ Agility is the ability of enterprises to♦ quickly adapt themselves to changes in their

environment and♦ seize opportunities as they avail themselves♦ have flexibility to deal with individual customer

requirements, to reduce response time to externaldemands, and to react on events

7

Source: Op ’t Land, M.; Proper, E.; Waage, M.; Cloo, J. and Steghuis, C.: Enterprise Architecture - Creating Value by Informed Governance, Springer-Verlag 2009, page 6. http://www.springerlink.com/content/k8jp3r/#section=132347&page=2&locus=10



Agility




9

Enterprise Enterprise

Real world Target state


Prof. Dr. Knut Hinkelmann 10Introduction to Business-IT Alignment

http://www.youtube.com/watch?v=L2zqTYgcpfg


Alignment of Business and IT



Business-IT alignment is a dynamic state in which a business organization is able to use information technology (IT) effectively to achieve business objectives

12

Business-IT Alignment



Role of IT Enterprises

Source: (Hanschke 2013, S. 27ff)N. Tschichold, ELCA

cost reduction

Raising efficiency(automation, ERP systems, …)

Achieving effectiveness(E-Business, E-Banking, …)

Shaping new businessmodels, disruption

oper

ativ

est

rate

gic

IT as an enabler of newbusiness models

IT as a contributor tovalue proposition

IT is an asset

IT is cost factor$

@



The Role of IT

(Hanschke 2010, p. 12)14Introduction to Business-IT Alignment


The Different Roles of IT - Portfolio

15(Hanschke 2010, p. 14)



Strategic Importance of IT

Source: (Hanschke 2013, S. 27ff)N. Tschichold, ELCA

16

oper

ativ

est

rate

gic


IT as a contributorto value proposition

IT is an asset

IT is cost factor$

@



Role of IT and affected Parts of the Enterprise

17

oper

ativ

est

rate

gic


IT as a contributorto value proposition

IT is an asset

IT is cost factor$

@ Business Model

Strategy

Organisation and Processes

Information Systems

Infrastructure

Enterprise Architecture



Mutual Dependencies between Business and IT

■ Almost all processes have become IT reliant, if not fullyautomated.

■ Thus, there is a mutual influence between informationsystems and the design of the business♦ New IT may lead to new business models, strategies, or

business process (re-engineering).♦ A (re-)design of a business process often demands

changes in the IT ♦ Changes in IT applications and information systems can

demand a re-design of business processes


Prof. Dr. Knut Hinkelmann 19

"There are no IT projects, only business projects."

(Paul Coby, CIO of British Airways)



Business-IT Alignment

■ The alignment of business and IT has to create an environment in which the IT department and the CIO ……are not merely installing technology to support business

processes but …are also using technology to shape the business.

20

Business InformationTechnology

shape

requirements




21

Business Model

Strategy


Information Systems

Infrastructure

Business Model

Strategy


Information Systems

Infrastructure

Real world Target state



The Role of Modeling



Models


Prof. Dr. Knut Hinkelmann 24

Models



Dealing with Complexity and Change

■ If the object you want to create or change issimple, and it is not likely to change, thenyou can do it directly.

■ On the other hand, if the object is complex, you can't see it in its entirety at one time and it is likely to change considerably over time, you need a description or model.

25

(John Zachmann, 2012)Introduction to Business-IT Alignment


■ Communication between people

■ Knowledge management and reuse

■ Training and learning

■ Persuasion and selling

■ Analysis of a business situation

■ Compliance management

■ Development of software requirements

■ Direct execution in software engines

Business Value of Modeling

■ Communication between people

■ Knowledge management and reuse

■ Training and learning

■ Persuasion and selling

■ Analysis of a business situation

■ Compliance management

■ Development of software requirements

■ Direct execution in software engines



internal knowledge external knowledge

tacitknowledge

in heads of people

self-awareknowledge

in heads of people

documentedknowledgein documents/

databases

formalknowledgeprogram code

knowledge bases

knowledge availability

people organisation informationtechnology

Knowledge in Enterprises

tacitknowledge

in heads of people

27

self-awareknowledge

in heads of people

documentedknowledge

in documents/databases

E =m c2

formalknowledge

program code/ knowledge base

function fac (int x) {if x > 0 {

return x * fac(x-1);}else return 1;

internal knowledge external knowledge

tacitknowledge

in heads of people

self-awareknowledge

in heads of people

documentedknowledgein documents/

databases

formalknowledgeprogram code

knowledge bases

knowledge availability

people organisation informationtechnology



Knowledge Transfer and Sharing

…knowledge repository books documents, files information systems...

retrievalstorage

knowledge

Transfer via ... …Socialisation

project teams coaching...

knowledge

Socialisation

…Communication face to face meeting

workshops phone, email...

explicit knowledge /Information

communicationexplicit knowledge/Information

Externalisation Internalisation

learning Knowledge Generation experience...



Implicit vs. explicit Knowledge

■ Implicit Knowledge♦ subjective♦ in the mind of people♦ based on experience, intuition

■ Explicit Knowledge♦ based on rationality♦ text, models, rules

■ By making knowledge explicit it canbe ……commonly agreed upon…preserved independent of people,

e.g. if expert leaves company

implicitknowledge



■ A picture is worth a thousand words

30

Communication



Experiment: Text vs. Model (1)

In the business process for health insurance, first theapplication data are captured by the clerk. Then theunderwriter makes the risk assessment is made by theunderwriter. Depending on the risk score, the clerkdetermines the premiums and sends the policy or theapplication is rejected.

■ Is «application data are captured» a task or an event?

■ Which tasks are executed in parallel?

■ Which activity is first: «determine premium» or «rejectapplication»

31

Process description:



Experiment: Text vs. Model (2)

In the business process for health insurance, first theapplication data are captured by the clerk. Then theunderwriter makes the risk assessment is made by theunderwriter. Depending on the risk score, the clerkdetermines the premiums and sends the policy or theapplication is rejected.

■ Is «application data are captured» a task or an event?

■ Which tasks are executed in parallel?

■ Which activity is first: «determine premium» or «rejectapplication»

32

Process description:




33

Business Model

Strategy


Information Systems

InfrastructureReal world

Business Model

Strategy


Information Systems

Infrastructure

As-is model

Modeling

Business Model

Strategy


Information Systems

InfrastructureTarget state

Business Model

Strategy


Information Systems

Infrastructure

To-be model

Realising


alignment of business and it introductionknut.hinkelmann.ch/lectures/abit2017-18/abit 01...

Documents